Lethal illegal refineries dot Nigeria's oil delta

ODIGBO, Nigeria Sat Mar 5, 2011 3:46pm EST

ODIGBO, Nigeria (Reuters) - A Nigerian soldier opens fire into drums of gasoline stacked among the mangroves, then runs back to a safe distance.

His colleagues set light to rags on the end of a stick and fling them into the liquid seeping from the bullet holes. The heat forces them to look away as orange flames roar into the air, billowing thick, black smoke.

Destroying illegal oil refineries dotted among the creeks of the Niger Delta is almost as dangerous for these soldiers as working here was for the young men who turned stolen crude oil into home-made gasoline.

Crude oil thieves -- known locally as "bunkerers" -- have been a fact of life for years in Africa's biggest oil and gas industry, puncturing pipelines and costing Nigeria and foreign oil firms millions of dollars in lost revenues each year.

A government amnesty two years ago for gunmen in the Niger Delta, where dirt-poor thatch-roofed villages sit among some of Africa's biggest industry installations, brought some respite.

But rising world oil prices have pushed the cost of gasoline in Nigeria up by a third to 150 naira ($0.98) a liter over the past three months, increasing demand on the black market and making the illegal refineries as profitable as ever.

"The local communities raised the alarm because of the devastating effects on their waterways and farms, and complaints have also started coming from the oil majors," said Timothy Antigha, military spokesman in the Niger Delta.

"We are winning the battle. The situation would have been worse if we were not around," he said.

A hundred soldiers backed up by gunboats and two helicopters were involved in Saturday's operation, which targeted three illegal refineries around Odigbo, a village near the border between Bayelsa and Rivers states.

By the time the soldiers arrived, abandoned barrels of gasoline, blackened earth pits and scorched foliage were all that remained -- these are close-knit communities and the bunkerers knew the military were coming.

The army seized equipment including home-made pumps and welding machines, but no arrests were made.

SCORES KILLED

Scores of people have been killed by explosions in illegal refineries like these in recent years.

The stolen crude is heated in a home-made tank over a fire in a pit in the ground. The aim is to boil off the gasoline, which condenses in a water-cooled pipe and runs off into barrels stored dangerously close to the naked flames.

"Gasoline explosions are traceable to these illegal refineries, and it's in the interests of the Niger Delta to put them to a halt," Antigha said.

The vast wetlands region on the Gulf of Guinea is arguably Africa's most heinous example of the "resource curse," where multi-billion dollar oil facilities run by firms including Royal Dutch Shell (RDSa.L), Chevron (CVX.N) and Agip (ENI.MI) sit among some of its least developed communities.

The illegal refiners risk their lives to eke out a living in a region where most people survive on $2 a day or less.

Industry executives estimate that as many as 100,000 barrels of oil a day were being stolen at the peak of unrest in the Niger Delta a few years ago -- worth more than $10 million a day at today's prices -- although much of it was taken by forging shipping manifests rather than tapping pipelines.

President Goodluck Jonathan, the first head of state from the Niger Delta, has pledged to develop the region if he wins April's election. But similar promises have been made before.

The oil minister said last month that communities in the region would receive an estimated $600 million in annual dividends as part of efforts to improve security and development under reforms currently before parliament.

But security experts say that only sustainable employment for tens of thousands of unemployed youths will prevent the illegal refineries springing up again once the army's back is turned. For now, that prospect remains a pipe dream.

(Writing by Nick Tattersall; Editing by Kevin Liffey)

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